Quarterly report pursuant to sections 13 or 15(d)


6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  

The Company concluded that at all times since New PE Holdco’s inception, New PE Holdco has been a VIE because the other owners of New PE Holdco, due to the Company’s involvement through its contractual arrangements, have at all times lacked the power to direct the activities that most significantly impacted its economic performance. Some of these activities include efficient management and operation of the Pacific Ethanol Plants, sale of ethanol, the procurement of feedstock, sale of co-products and implementation of risk management strategies. At the time of New PE Holdco’s inception, however, the Company did not have an obligation to absorb losses or receive benefits that could potentially be significant to New PE Holdco and, as a result, it was determined that the Company was not New PE Holdco’s primary beneficiary. Upon the Company’s purchase of its 20% ownership interest in New PE Holdco on October 6, 2010, the Company, through its ownership interest, had an obligation to absorb losses and receive benefits that could potentially be significant to New PE Holdco. As a result, the Company then became the primary beneficiary of New PE Holdco and began consolidating the financial results of New PE Holdco. On November 29, 2011, the Company purchased an additional 7% ownership interest in New PE Holdco for $4,502,000 in cash. On December 19, 2011, the Company purchased another 7% ownership interest in New PE Holdco for $4,615,000 in cash.

The carrying values and classification of assets that are collateral for the obligations of New PE Holdco consisted of the following (in thousands):


    June 30, 2012     December 31, 2011  
Cash and cash equivalents   $ 958     $ 2,070  
Other current assets     11,241       14,320  
Property and equipment     150,653       155,523  
Other assets     1,208       1,693  
Total assets   $ 164,060     $ 173,606  
Current liabilities   $ 4,903     $ 3,064  
Long-term debt, including current portion     85,279       73,256  
Other liabilities     183       158  
    $ 90,365     $ 76,478  


The Company’s acquisition of its ownership interest in New PE Holdco does not impact the Company’s rights or obligations under any of its contractual agreements. Further, creditors of New PE Holdco do not have recourse to the Company. Since its acquisition, the Company has not provided any additional support to New PE Holdco beyond the terms of its contractual agreements. As further discussed in Note 11, in July 2012, the Company acquired an additional ownership interest in New PE Holdco, increasing its total ownership to 67%.